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Reliable Construction Ltd$,$ a construction company, has $100000000$ shares in issue, which are currently trading at a market price of R$38$ each. The company is considering the takeover of Concem Ltd$,$ a supplier of construction materials. Concem Ltd has $20000000$ shares in issue, trading at a market price of R$3\mathrm{.}40$ each.

Concem Ltd$\text{'}$s net cash flow after tax for the year just ended was R$6300000.$ Reliable Construction Ltd anticipates that managerial and other synergies resulting from the takeover will result in Concem Ltd$\text{'}$s net cash flow after tax increasing by $10\%$ per year in the first three years after the takeover, and thereafter by an average rate of $6\%$ per year for the foreseeable future.

The appropriate discount rate for evaluating the cash flows of Concem Ltd for acquisition is estimated at $15\%.$

Required:

$1\mathrm{.}1$ Using the information provided, estimate the post$-$acquisition value of Concem Ltd$.$ Comment on the size of the total value gain or loss that is expected to arise as a result of the takeover.

$1\mathrm{.}2$ Assume that Reliable Construction Ltd has reached an agreement to acquire Concem Ltd at a premium of $15\%$ above its current market value and intends to finance the acquisition through the issue of $10\mathrm{.}75\%$ coupon bonds with a par value of R$100000$ each. The bonds will mature in $15$ years' time. Coupons will be paid semi$-$annually in arrears. The yield to maturity on similar bonds is currently $11\mathrm{.}50\%.$ At what value can Reliable Construction Ltd expect to issue the bonds in the market?

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